The reputation of CPAs, perhaps exaggerated, is that they are precise, introverted, and conservative. Whether they are employed by a public auditing firm or by an organization, a CPA’s traditional responsibilities have been financial stewardship and assurance of financial accounting compliance with regulatory and tax agencies and typically report past historical data.
If you have not witnessed the deluge of big data and business analytics media coverage to date, then welcome back from the coma you were apparently in for the last couple of years. For the rest of you, perhaps you have the same nagging question that I have: Are big data and business analytics such a big deal that if our organization is late to the party in deploying them, we will never catch up to our competitors?
Have you ever noticed how we often get things backward? At a dinner restaurant some order their entrée before their appetizer. During a job interview some employers are biased with their first impressions of the candidate, such as by their clothing attire, before learning the skills and competencies of the individual.
Please allow me provide some background before I make my case as to why some less experienced “data scientists” get things backward. Then I will explain why.
Many organizations over-rate the quality of their enterprise and corporate performance management (EPM / CPM) methods and supporting software systems as well as exaggerate how comprehensive and integrated they are. For example, when you ask executives how well they measure and report their costs and non-financial performance measures, most proudly boast that they are very good. However, this is inconsistent and conflicts with surveys where anonymous replies from mid-level managers candidly score their scaled answers as “needs much improvement.”
Every organization cannot be above average!
What makes exceptionally good EPM / CPM systems exceptional?
Rather than try to be a sociologist and psychiatrist to explain the contradictions of executives boasting superiority while anonymously answered surveys reveal inferiority, let’s simply describe the full vision of an effective EPM / CPM system that organizations should aspire to.
Public sector government agencies at all levels – Federal, state, and local – have been talking and writing about enterprise performance management (EPM) for many years. Some are implementing EPM methods like strategy maps, KPI balanced scorecards, bottom-up driver-based budgeting, and activity-based costing (ABC) to measure the conversion of budget spending “inputs” for visibility of their “output” costs. Some do it well, but I sense only a few. There is some legislation requiring use of EPM methods such as ABC. But are their costing models too simple and highly aggregated to gain insights? Do they calculate them for compliance but not for decision support?
When they measure and report KPIs, how much is linked to accountability with consequences?
No laws. No jail.
Can you imagine accountants as American cowboys of the Wild, Wild West in the 1800s? I can. And they can be dangerous. Yeehaw! Yippee-i-o-i-a!
In place of guns in their belt holsters the cowboy accountant may be carrying a smartphone. Their rodeo rope that cowboys use to catch running steers may be their audit controls manual. The cowboy accountant would like to use a red hot branding iron to mark those managers who excessively sandbag their department’s annual budget amounts, but they will resort to just remembering who those budget busters are to pester later. Cowboy accountants also wear well-shined wing-tipped dress shoes as their cowboy boots.
Futurists enjoy taking out their crystal ball and projecting future innovations, but they are typically wrong. For example, George Orwell’s book, “1984,” which was published in 1949, did not come close with its projections. And in the 1960s, I recall a Walt Disney television show describing automobiles that required no driver and were guided by a magnet-like strip imbedded in the street’s or highway’s roadbed. Nice try.
In contrast, historians research the past to determine what lessons might be learned and applied today. For example, historians examine the judgments, policies and actions of past U.S. Presidents and international government leaders to assess what actions may best serve citizens today. The recent movie “Lincoln” is an example.
But which group — futurists or historians – provides more useful information?
Are these fads and fashions or the real deal? Are CFOs attracted to them as the shiny new toys they must have on their resume for their next bigger job and employer? My belief is these four “hot” managerial methods and tools are essential. But they need to be thought through and properly designed and customized; and not just slapped in willy-nilly just to have them as shiny new toys.
What are these “four hot tools”, you ask? Read on for insight by author Gary Cokins.
Most of us are technical. We like to be fact-driven. We embrace technologies of all flavors, including computer hardware, software, mobile devices, the Internet and social media. We tolerate opinions of others that differ from ours, but we prefer tangible, hard evidence that supports any position or argument. The problem is that organizations are made up of people, not just computers and equipment.
We like research studies and analytics to gain insights and foresights, as well as to solve problems and pursue opportunities. But, darn it, people get in the way.
Organizations need more “champion” behavior from their middle managers. Linkedin discussion groups frequently chatter about poor guidance from executives. A recent discussion had many discussants moaning about their CFO function’s reluctance to implement activity-based costing (ABC) principles for lame reasons such as it would result in two different sets of product costs or that ABC is too complicated to implement. This is nonsense.